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Bank of Ireland now offering refinancing loans for SMEs printable version

24 Apr 2015: posted by the editor - Business, Ireland

Bank of Ireland is the first Irish bank to offer refinancing loans under the Credit Guarantee scheme to micro, small and medium sized enterprises whose own banks are exiting the Irish market.

The Credit Guarantee Scheme aims to help viable businesses which have been refused conventional bank credit facilities access a state-backed guarantee for 75% of their loans.

Up until now, the Scheme was only available to businesses applying for new loans and was not available to companies who wished to move loans from a bank which is withdrawing from the Irish market.

Minister Nash announced two main changes to the scheme earlier this year:

To allow for refinancing loans where an SME's bank is exiting the Irish SME credit market

To extend the maximum length of the guarantee from three to seven years.

Bank of Ireland is now ready to offer such refinancing loans under the Credit Guarantee Scheme to businesses which previously had loans with banks such as:

ACC Bank

Danske Bank

Lloyds/Bank of Scotland Ireland

Irish Nationwide/IBRC

Anglo Irish Bank/IBRC

The refinancing loans will be available to companies even if their loans have been sold as part of a portfolio to another third party institution.

Minister Nash said: “There are thousands of SMEs who have been affected by the departure of some foreign banks from the business credit market. Consistently, these business owners have been raising the difficulties they face in seeking refinancing loans with me.

“These entrepreneurs will now be able to go to Bank of Ireland to seek refinancing credit and access the State Credit Guarantee Scheme. I hope to see similar moves announced shortly by AIB and Ulster Bank. I believe this broadening of the Credit Guarantee Scheme will see many more SMEs access it and should mean they are able to avail of better deals on their loans. This in turn will be positive for job creation.”

Mark Cunningham, Director, Bank of Ireland Business Banking said: "We are pleased to be the first Irish Bank to be accredited under the terms of the Credit Guarantee Scheme 2015. The inclusion of refinancing Banks exiting the Irish market and the extension of the Guarantee from three to seven years is very much welcomed as it is envisaged to further assist in the availability of credit into the Irish SME market. The Bank continues to work closely with Capita, the Scheme operators and the Department of Jobs, Enterprise and Innovation in promoting it where relevant. As Ireland's No 1 Bank for business customers and the main provider under the Credit Guarantee Scheme, we would encourage SMEs that are looking to secure funding for their business to come and speak to us.”

The Credit Guarantee Scheme provides a 75% guarantee to banks against losses on qualifying loan facilities. Bank of Ireland, AIB and Ulster Bank are participating lenders. The borrower pays a 2% annual premium, which partially covers the cost of providing the guarantee.

Following a public tendering process, Maynooth based company, Capita Asset Services were selected to manage and operate the Scheme on behalf of the Department of Jobs, Enterprise and Innovation.

How to apply
Applications for credit should be made to the participating banks in the usual way. The lender will assess the application. In the event that the lender determines that the application is viable but not approved because of insufficient security or higher risk in the case of a growth/expansionary SME, the lender will then determine eligibility under the Scheme.

In the event that an SME has an application for credit refused by one of the participating lenders, the customer can request the bank to consider the application under the Credit Guarantee Scheme.

At present participating banks are Bank of Ireland for the Credit Guarantee Scheme including refinancing for exiting banks and maximum period of guarantee 7 years; and AIB and Ulster Bank for the original Credit Guarantee Scheme.

Tags: SME finance

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